ECONOMIC OUTLOOK FOR AUSTRALIA

Press, Volume LXXXIII, Issue 25304, 2 October 1947, Page 8

ECONOMIC OUTLOOK FOR AUSTRALIA

REDUCED OUTPUT Observations on the economic outlook in Australia more or less general in their application were made at the annual meeting cf Elder, Smith and Company, Adelaide, by the chairman of directors, Mr P. A. Mcßride. , “Due mainly to the price of wool and our other exports,” said Mr Mcßride, “we are perhaps at the highest level of national income ever reached, and this on the basis of a boom resulting from a huge deferred demand and accumulated war savings. The question is, how long can this last? The Government may for a time with its overflowing Treasury cushion the impact, as it is doing today, by 1 the payment of certain subsidies to keep the pri.-e of goods, such as tea, for example, within the purchasing power of the people, but what will happen when the means to do this are not available? “The desire of most people is to get back to a normal and happy way of living. As others have said, the remedy and what we must do now Is: (1) to cut Government expenditure to a level somewhere near to our prospective ability to pay. and (2)- to try to re-establish conditions which will encourage and stimulate industry and enterprise, which are necessary to sustain production and distribution of goods at high volume. Removing the Incentive “This means the adoption of a policy in which people who show energy and ability have some prospect of reward for their efforts. The present tax system almost obliterates these rewards. It discourages extra effort and penalises success, with the result you see to-day—-a lessening up of output. Incentive and production go hand in hand. Take away incentive and production must fall. There is no more certain way to kill enterprise than by taking the will to earn from the people by heavy taxation.” “The total Australian wool clip, namely 2.960,751 bales for the season under review, was,” said Mr Mcßride at another stage in his address, “approximately 644,000 bales jess than that produced in the 1933-34 wool year, but the higher prices obtained more than made up in value for this reduction. Normally high prices stimulate production and curtail consumption, but fortunately for Australia, with a wool-starved world's demand, the latter tendency *s no f yet evident. The falling oft in production is mainly due to the recent drought, from which we have jrnot yet recovered, but thera . is also little encouragement for woolgrowers to s Tully stock their properties when such a large portion of their earnings is taken from them by way or taxation. •’lncluding Australian Wool Realisation Commission’s wool. • Australia exported for the vear 4.176,000 bales, which rea» lised £120,775,000. The United States of America proved to be our best single customer, purchasing to the extent of £35,748.000, which has greatly assisted Australia with a valuable supply of dollars. “It 1 Is not generally known that prior Io the arrangement of lend-lease ana the entry of America into the last war. the reserve stock pile of 1.000,000 bales of Australian wool was an important factor in assisting Britain to fins nee her urgent war supplies from the United States. A supply of dollars at this time would be equally important in enabling us to further help the united Kingdom.*’